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An analysis by Herzog, Fox & Neeman
The Israeli government has recently introduced a new tax regime effective from 1st January 2025, aiming to curtail tax deferral by closely held companies through stricter taxation of undistributed profits.
The law targets Labour-Intensive Companies, imposing marginal tax rates on profits exceeding 25% of turnover, and Holding Companies, adding a 2% tax on accumulated retained earnings, with exemptions for smaller earnings. Measures include forced profit distribution, revised liquidation provisions, and narrowed exemptions for Personal Service Companies, such as stricter ownership thresholds and partnership taxation.
Tax experts from our Israeli member firm Herzog, Fox & Neeman have analysed these changes in more detail below and recommended that compliance demands detailed reporting and strategic adjustments, with temporary liquidation benefits and specific deductions offered to ease transition.
You can read the full article here.
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